The Foreign Exchange Market is an over-the-counter (OTC) market, which means that orders are matched without a central exchange and clearing house. Different market makers are used to trade currencies because they have different levels of access:
The market between banks - The Electronic Brokerage System is a way for big banks to trade with each other (EBS). In this market, banks will only share their quotes with banks that they trade with. This is not a direct market...
The Foreign Exchange Market is an over-the-counter (OTC) market, which means that orders are matched without a central exchange and clearing house. Different market makers are used to trade currencies because they have different levels of access:
The Electronic Brokerage System is how big commercial banks trade with each other on the Inter-bank Market (EBS). In this market, banks will only share their quotes with banks that they trade with. Retail traders can't directly buy and sell on this market.
The Online Market Maker: Retail traders can get into the FX market through online market makers based mostly in the US and the UK. Most of the time, these market makers work with more than one bank on EBS. The more trades a market maker does, the more banks it probably works with.
Market Hours
Forex is a market where people trade as long as banks are open in one of the world's major financial centres. This lasts from the start of Monday morning in Tokyo until Friday afternoon in New York. In terms of GMT, the trading week goes from Sunday night to Friday night, which is about 24 hours per day for 5 days.
Price Reporting Volume of Trading
Forex is different from many other markets in that there is no consolidated tape and prices and volumes of trades are not reported. It is possible for different traders in the market to make deals at different prices at the same time. For a market maker to give good prices, he or she needs to be very close to the larger market. Pricing, on the other hand, is usually pretty close between market makers. The main difference between Forex and other markets is that there is no information about how much has been traded at any given time or price. Open interest and even volume on currency futures can be used as proxies, but they are not perfect.
